The cash market was showing more signs of weakness Wednesday as the latest blast of arctic cold was forecast to be receding in some regions. Many points in the Midcontinent and West that had been rising Tuesday were falling Wednesday by substantial amounts, and in many cases the remaining gains were considerably smaller than on the day before.

A majority of points were down between a little less than a nickel and about 55 cents. Points ranging from flat to a little more than a dime higher were mostly in the Gulf Coast and at Northeast and Midwest citygates. Nearly all of the gains were in single digits.

Cash traders will have negative screen guidance Thursday after January futures ended this week’s rising streak with a drop of 13.2 cents Wednesday (see related story).

Forecasts of highs in the 70s Thursday at most locations in the South mean the region will have little heating load left. Southern Natural Gas said that with storage injections — that’s right, injections — at 100% of capacity and injection nominations expected to exceed capacity by 50,000 Dth/d starting Thursday, it was “too close to call” on whether it might issue an OFO Type 6 Thursday through Sunday.

Although the Midwest will continue to experience sub-freezing lows in some sections Thursday, its ongoing warming trend was sufficient to allow Northern Natural Gas to end a System Overrun Limitation that had been in effect for three days (see Transportation Notes). Temperatures are also rising in the Midcontinent, where Oklahoma City’s peak mercury level is forecast to go from about 37 Wednesday to the low 50s Thursday.

The Northeast will see little change in temperatures Thursday. It managed to sustain small gains at most points Wednesday despite predictions of Thursday highs around 40 for Boston and New York City being somewhat moderate for mid-December.

The Pacific Northwest, which has been pounded by a tremendous arctic storm since the weekend, will continue to have frigid conditions Thursday along with the Rockies. However, that didn’t prevent large price losses in both areas. Several Rockies points had been at near-parity with or even exceeded Henry Hub pricing Tuesday, but their big losses Wednesday put a sizeable negative basis spread back into the picture (Henry Hub rose about a nickel).

What is expected to be a very large storage withdrawal report Thursday may help to put a temporary floor under the market. Citi Futures Perspective analyst Tim Evans said he’s looking for a draw of 100 Bcf for the week, but noted that he’s seen some forecasts for up to 120 Bcf. Evans also projected pulls of 130 Bcf and a whopping 160 Bcf for the weeks ending Dec. 19 and Dec. 26, respectively.

The National Weather Service (NWS) expects below-normal temperatures to continue in most of the northern and western U.S. during the week of Christmas. In its six- to 10-day forecast for the Dec. 22-26 period, the agency looks for below-normal readings everywhere north and west of a line extending westward from the northern Mid-Atlantic through the southern Midwest, the central Midcontinent and the southern Rockies before turning southward through central Arizona. NWS predicts above-normal conditions in all of Florida and along the Gulf Coast through most of New Mexico.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.